2007-2008 NEW YORK STATE EXECUTIVE BUDGET
HEALTH AND MENTAL HYGIENE
ARTICLE VII LEGISLATION
MEMORANDUM IN SUPPORT

CONTENTS

MEMORANDUM IN SUPPORT

A BUDGET BILL submitted by the Governor in
Accordance with Article VII of the Constitution

AN ACT to amend the New York Health Care Reform Act of 1996, in relation to extending certain provisions relating thereto; to amend the New York Health Care Reform Act of 2000, in relation to extending the effectiveness of provisions thereof; to amend the public health law, in relation to the distribution of pool allocations and graduate medical education; to amend chapter 62 of the laws of 2003 amending the general business law and other laws relating to enacting major components necessary to implement the state fiscal plan for the 2003-04 state fiscal year, in relation to the deposit of certain funds; to amend the public authorities law, in relation to the transfer of certain funds; to amend chapter 2 of the laws of 1998 amending the public health law and other laws relating to expanding the child health insurance plan, in relation to the effectiveness of certain provisions thereof; to amend chapter 703 of the laws of 1988 relating to enacting the expanded health care coverage act of nineteen hundred eighty-eight and amending the insurance law and other laws relating to expanded health care and catastrophic health care coverage, in relation to extending certain provisions thereof; to amend the public health law, in relation to continuing the priority restoration adjustment; to amend chapter 731 of the laws of 1993 amending the public health law and other laws relating to reimbursement, delivery and capital costs of ambulatory health care services and inpatient hospital services, in relation to extending the effectiveness of portions thereof; to amend the social services law, in relation to extending payment provisions for general hospitals; to amend chapter 600 of the laws of 1986 amending the public health law relating to development of pilot reimbursement programs for ambulatory care services, in relation to the effectiveness of such chapter; to amend chapter 753 of the laws of 1989 amending the public health law and other laws relating to general hospital reimbursement for inpatient and ambulatory surgery, in relation to the effectiveness of portions thereof; to amend the public health law, in relation to extending access to community health care services in rural areas; to amend chapter 266 of the laws of 1986 amending the civil practice law and rules and other laws relating to malpractice and professional medical conduct, in relation to extending the applicability of certain provisions thereof; to amend chapter 63 of the laws of 2001 amending chapter 20 of the laws of 2001 amending the military law and other laws relating to making appropriations for the support of government, in relation to extending the applicability of certain provisions thereof; to amend the insurance law, in relation to liquidation of domestic insurers; to amend the public health law, in relation to the comprehensive diagnostic and treatment centers indigent care program; to amend the public health law, in relation to certain audits being deemed presumptively correct; to amend the insurance law, in relation to article forty-three corporations; to amend chapter 82 of the laws of 2002 amending the environmental conservation law and other laws relating to certain portions of funds borrowed, in relation to extending the length of time related to the borrowing of certain funds; and to amend the state finance law, in relation to extending the suspension of certain provisions (Part A); to amend the elder law, in relation to the elderly pharmaceutical insurance coverage program, program eligibility and the generic drug dispensing fee; to amend the insurance law, in relation to the early intervention program; to amend the public health law, in relation to providers of evaluations, service coordination services and/or early intervention services; to amend the state finance law, in relation to creating the early intervention program account; to amend chapter 62 of the laws of 2003, amending the public health law relating to allowing for the use of funds of the office of professional medical conduct for activities of the patient health information and quality improvement act of 2000, in relation to the effectiveness thereof; to amend the education law, in relation to biennial licensing fees for physicians; to amend chapter 56 of the laws of 2000, amending the public health law, the general business law and the insurance law relating to the sale and possession of hypodermic syringes and needles, in relation to making permanent the expanded syringe access demonstration program; to amend the state finance law, in relation to the federal-state health reform partnership program account; to amend the education law, in relation to including body mass index screening for school children; to amend the state finance law, in relation to establishing the Medicaid training contract account; to repeal certain provisions of the public health law relating to the health information technology demonstration program; and to repeal section 4 of chapter 198 of the laws of 1978, relating to authorizing projects to provide improved and expanded school health services for pre-school and school-age children and relating to the maximum duration date for such projects (Part B); to amend the social services law and the public health law, in relation to family health care plus, managed long term care plans, insurance payments, prescription drugs, general hospital reimbursements, hospital assessments, rates of payment for residential health care facilities, and the long term care demonstration program; to amend the state finance law, in relation to enacting the “New York False Claims Act”; to amend the insurance law, in relation to compensation for report of insurance fraud; to amend the penal law, the public health law and the criminal procedure law, in relation to health care fraud; to amend the workers' compensation law, in relation to confidentiality of workers' compensation records; to amend the tax law, in relation to general powers of tax commission; to amend the social services law, in relation to claims and false statements; to amend the penal law, the labor law and the civil practice law and rules, in relation to health reform; to amend chapter 66 of the laws of 1994, amending the public health law, the general municipal law and the insurance law relating to the financing of life care communities, in relation to the application of the effectiveness thereof; to amend the general municipal law, in relation to certain projects; to amend the social services law and chapter 58 of the laws of 2005, amending the public health law and other laws relating to authorizing reimbursements for expenditures made by social services districts for medical assistance, in relation to medical assistance for needy persons; to amend chapter 483 of the laws of 1978, amending the public health law relating to rate of payment for each residential health care facility to real property costs, in relation to making certain provisions permanent; to amend chapter 474 of the laws of 1996, amending the education law and other laws relating to rates for residential health care facilities, the public health law and chapter 639 of the laws of 1996, amending the public health law and other laws relating to welfare reform, in relation to reimbursements; to amend chapter 884 of the laws of 1990, amending the public health law relating to authorizing bad debt and charity care allowances for certified home health agencies, in relation to the effectiveness thereof; to amend chapter 81 of the laws of 1995, amending the public health law and other laws relating to medical reimbursement and welfare reform, in relation to reimbursements and the effectiveness thereof; to repeal certain provisions of the public health law and the penal law relating thereto; and providing for the repeal of certain provisions upon expiration thereof (Part C); and to amend the mental hygiene law, in relation to provider assessments (Part D)

PURPOSE:

This bill contains provisions needed to implement the Health and Mental Hygiene portions of the 2007-08 Executive Budget.

SUMMARY OF PROVISIONS, EXISTING LAW, PRIOR LEGISLATIVE HISTORY AND STATEMENT IN SUPPORT:

Part A – Modify and reauthorize the Health Care Reform Act (HCRA), which expires on June 30, 2007 and modify provisions to enact proposals to preserve its fiscal stability and authorize an additional insurance company conversion

The purpose of this bill is to extend provisions of the Health Care Reform Act (HCRA) governing the financing of health care services through March 31, 2008. Currently, HCRA is scheduled to sunset on June 30, 2007.

In 1996, New York enacted landmark health care reform legislation, HCRA, which replaced the hospital reimbursement system established in 1983 with a deregulated system. This Act was designed to improve the fiscal health of hospitals and support critical public health programs. It was subsequently extended and modified several times since then, most recently in 2005 (when it was reauthorized through June 30, 2007).

This bill extends HCRA through March 31, 2008 and amends provisions in order to maximize the use of available revenue sources, modify programs and secure the fiscal viability of HCRA through its proposed extension period. Specifically:

• Sections 1 through 3 amend various provisions to extend effective dates through December 31, 2008. These provisions include the continuation of the Medicaid inpatient hospital reimbursement methodology, the collection of surcharges, the Graduate Medical Education (GME) methodology, and the Covered Lives Assessment.
• Section 4 provides funding for various administrative costs of the Department of Health to assist in the implementation of HCRA programs.
• Sections 5 and 6 amend sections 2807-l and 2807-v of the Public Health Law to subject future funding commitments of the Health Care Initiatives and Tobacco Control and Insurance Initiatives Pools to appropriations in the Budget. Further, statutory references to priority funded programs (i.e., “tiering”) are deleted. Since HCRA is “on-budget” and governed by State Finance Law, tiering is no longer necessary.
• Section 7 amends section 1680-j of the Public Authorities Law to modify and extend the authority to transfer funds from HCRA to the General Fund for purposes related to subsidizing Health Care Efficiency and Affordability Law for New Yorkers (HEAL-NY), capital grants and debt service costs.
• Sections 8 through 11 amend section 2807-s of the Public Health Law to extend the collection of the Covered Lives Assessment, which is used to fund GME and other HCRA programs, and — effective April 1, 2008 — increases the collection target by $75 million (from $775 million to $850 million) annually.
• Sections 12 and 13 amend section 2807-c of the Public Health Law to make technical corrections to HCRA revenue in order to clarify the sources of revenues excluded from the calculation of cash assessments imposed on hospitals for purposes of funding the bad debt and charity care pools.
• Sections 14 through 17 extend the authorization for certain provisions historically extended with HCRA (i.e., requirements for timely payments of hospital admission billing, the Health Occupation Program Development/Workplace Demonstration, uniform billing fiscal intermediary requirements, and authorization of cost-based rates for ambulatory surgery). The Ambulatory Care Pilot Program is permanently continued since it provides the State the authority to set various reimbursement rates and the joint Child Health Plus (CHP) application mandate is allowed to expire since the Department of Health has complied with this requirement.
• Sections 18 through 22 amend section 2807-m of the Public Health Law to extend the GME distribution methodology including supplemental distributions to hospitals that meet certain objectives and to Area Health Education Centers. In addition, GME payments for 2007 are reduced by $24 million. Further, an amendment to section 2807-s of the Public Health Law extends the point of service regional surcharge which allows non-electing payors to reimburse facilities directly rather than through the State.
• Section 23 adds a new paragraph (i) to subdivision 1 of section 2807-c of the Public Health Law to establish a $48 million Medicaid payment to public hospitals that serve more than thirty-five percent of Medicaid recipients. The state share of this rate adjustment ($24 million) is funded from the commensurate reduction of the HCRA GME program.
• Sections 24 and 25 amend provisions relating to the CHP Program to permanently extend certain income and benefit expansions and continue existing State authority to contract with existing plans that provide CHP services.
• Sections 26 through 37 amend sections 2510 and 2511 of the Public Health Law to expand eligibility and make modifications to the CHP Program including limiting temporary enrollment in certain instances, establishing a Premium Assistance Program to assist beneficiaries with payments, expanding income eligibility to 400 percent of the Federal Poverty Level, transferring rate approval from the State Insurance Department to the Department of Health and freezing plan premiums at existing levels.
• Section 38 extends the Individual Subsidy Program, for those individuals enrolled in the program prior to January 2001, through March 31, 2008.
• Sections 39 and 40 amend section 2952 and 2958 of the Public Health Law to extend funding for the Rural Health Network and Access Development programs.
• Sections 41 and 42 amend section 367-o of the Social Services Law to extend the Health Insurance Demonstration Program through March 31, 2008. Further, modifications to the language are made to ensure that payments are related to services provided to recipients.
• Section 43 amends section 2808 of the Public Health Law to extend and modify the nursing home workforce recruitment and retention program to phase out the payments equally over three years and to ensure that payments are related to services provided to Medicaid recipients.
• Section 44 amends section 2807-c of the Public Health Law to extend and modify the hospital workforce recruitment and retention program to reduce payments to providers and to ensure that payments are related to services provided to Medicaid recipients.
• Section 45 amends section 2807 of the Public Health Law to extend and modify the clinic workforce recruitment and retention program to ensure that payments are related to services provided to Medicaid recipients.
• Sections 46 and 47 amend section 367-q of the Social Services Law to extend and modify the personal care workforce recruitment and retention program to ensure that payments are related to services provided to Medicaid recipients.
• Section 48 amends section 3614 of the Public Health Law to extend the home care workforce recruitment and retention program.
• Sections 49 through 54 extend the Physician’s Excess Medical Malpractice Program through June 30, 2008.
• Section 55 amends section 2807-p of the Public Health Law to extend and modify the Clinic Bad Debt and Charity Care Program.
• Sections 56 through 58 amend section 2807-k and section 2807-w of the Public Health Law to extend funding for Hospital Indigent Care distributions and the High Need Indigent Care Adjustment through December 31, 2007. Further, regulations are required by January 1, 2008 to establish a new methodology which requires that distributions be based on losses from providing services to the uninsured.
• Sections 59 through 61 amend sections 2807-c, 2807-j and 2807-t of the Public Health Law, respectively, to strengthen the State’s ability to collect revenues based on the conclusions of an audit by deeming such audits presumptively correct.
• Sections 62 and 63 amend sections 4301 and section 7313 of the Insurance Law to authorize the conversion of an insurance company located in downstate New York from a not-for-profit to a for-profit entity.
• Sections 64 and 65 extend through March 31, 2011 the statutory moratorium of the General Fund’s obligation to repay a $200 million loan to HCRA and for HCRA to draw upon the Tobacco Guarantee Fund.
• Sections 66 through 69 allow for waiver authority and severability and sets effective dates.

Part B – Improve public health services by implementing cost savings measures, authorizing new fees and extending priority programs

This bill enacts the various provisions necessary to implement the 2007-08 Executive Budget recommendations for the State’s public health programs, including the Elderly Pharmaceutical Insurance Coverage (EPIC) Program; the Early Intervention (EI) Program; the Office of Professional Medical Conduct (OPMC) programs; the Obesity Prevention Program and the School Based Health Center Program.

• Sections 1 and 2 modify the Elder Law in relation to the EPIC Program to reduce pharmacy reimbursement levels for generic and brand name prescription drugs (from average wholesale price minus 20 percent to 30 percent for generics, and from average wholesale price minus 13.25 percent to 15 percent for brands).
• Section 2-a amends the Elder Law in relation to the EPIC Program to increase the dispensing fee paid to participating pharmacies for generic drugs by $1.00 — from $4.50 to $5.50.
• Section 3 requires all eligible EPIC enrollees to participate in Medicare Part D as a condition of continued eligibility for EPIC, unless such enrollment would result in a significant financial hardship. To hold seniors financially harmless, the EPIC Program will cover Medicare Part D premium costs for fee enrollees and provide an equivalent benefit to deductible enrollees by lowering their EPIC deductible.
• Section 4 amends the Insurance Law to implement measures to increase health insurance reimbursement for medical services provided through Early Intervention. Under the proposal, insurers cannot deny coverage for a medical service that is normally covered under the terms of the policy due to the location where services are provided, the duration of the condition and/or the likelihood of significant improvement, or whether the service provider is not a participant in the insurer’s network.
• Section 5 amends the Public Health Law to establish an Early Intervention Program fee of $125 for individual providers and $225 for agency providers to support the approval and reapproval process of all EI providers which will now be statutorily required. Approval will be effective for five years.
• Section 6 amends the State Finance Law to add a new section 99-q, establishing the Early Intervention Program Account. The new account will collect EI provider fee revenues and be used to offset administrative expenses relating to approvals and reapprovals within the Program.
• Section 7 amends prior chapter laws relating to the Public Health Law to permanently allow the Professional Medical Conduct Account to be used to finance physician profiling activities which help ensure quality health care for New Yorkers. Such authority has been granted annually as part of the Enacted Budget since 2003-04.
• Section 8 amends the Public Health Law to increase the biennial licensing fee for physicians by $400 — from $570 to $970 — to finance the activities of the Office of Professional Medical Conduct.
• Section 9 amends Chapter 16 of the laws of 2003 to permanently extend the Expanded Syringe Access Demonstration Program, known as the Needle Exchange Program.
• Section 10 amends the State Finance Law to modify the provision of the Federal-State Health Reform Partnership (F-SHRP) Account.
• Sections 11 and 12 require a child’s Body Mass Index (BMI) and weight status category to be reported on mandatory school health certificates. This provision also requires a sampling of school districts to report this information to the Department of Health.
• Section 13 repeals subdivision 18-a of Section 206 of the Public Health Law in relation to a Health Information Technology Program that is no longer supported in the Budget.
• Section 14 makes the School Based Health Center Program permanent by repealing Section 4 of Chapter 198 of the laws of 1978.
• Section 15 modifies the State Finance Law to establish the Medicaid Training Contract Account and allows funds to be used to offset administrative expenses.

Part C – Authorize Medicaid cost containment and reforms to provide access to health insurance coverage

This bill initiates a fundamental restructuring of New York’s health care system by instituting reforms to move toward a rational reimbursement system, shifting spending from expensive institutional care to community and home-based alternatives, improving care coordination for medically complicated and high cost individuals, appropriately paying for pharmaceuticals by reducing the cost of prescription drug spending, strengthening the State’s anti-fraud capabilities, and implementing cost containment measures to encourage program efficiencies and make health care more affordable.

This bill also advances several initiatives to reduce the number of uninsured by providing access to health insurance for all children by expanding eligibility in the Child Health Plus Program, simplifying the enrollment and recertification process for Medicaid and Family Health Plus programs, and establishing a new program to increase employer sponsored insurance.

• Sections 1 through 22 provide for targeted investments and reforms, including:
  • Streamlining the eligibility process for certain adults in the Medicaid and Family Health Plus programs to eliminate unnecessary documentation requirements for renewals and to provide 12 months of guaranteed continuous health insurance coverage.
  • Implementing a series of Medicaid demonstration programs to improve care coordination and management for medically complicated and high cost individuals;
  • Creating a new program to promote employer-sponsored health insurance programs by providing cost-effective premium subsidies for individuals eligible for public health insurance coverage; and
  • Expanding the Managed Long Term Care Program by eliminating unnecessary program restrictions including limitations on enrollment and the number of plans;
    • Section 22-a increases the dispensing fee for generic drugs to encourage the use of lower cost drug alternatives.
• Section 23 decreases pharmacy reimbursement for the Medicaid program from average wholesale price (AWP) less 13.25 percent to AWP less 15 percent for brand name drugs and AWP less 20 percent to AWP less 30 percent for generic drugs.
• Sections 24 through 28 amend Article 2-a of the Public Health Law in relation to the Preferred Drug Program (PDP) and Clinical Drug Review Program (CDRP) to:
• Include cost as a criterion in the drug review process and amend the time frames for public notice; and
• Authorize the Commissioner to modify the PDP for inclusion of anti-depressants in consultation with the Office of Mental Health.
• Section 29 eliminates the 2007 inflationary trend factor for hospitals and nursing homes.
• Sections 30 through 34-a propose savings and modify hospital reimbursement by:
  • Continuing the hospital assessment at .35% and waiving the assessment reconciliation;
  • Continuing certain Hospital Worker Recruitment and Retention adjustments for rural and general hospitals;
  • Reducing Graduate Medical Education (GME) payments to facilities that no longer have actual costs sufficient to support their current GME reimbursement; and
  • Re-weighting the Diagnostic Related Grouping (DRG) inpatient reimbursement system to realign reimbursement with costs.
• Sections 35 and 36 change the nursing home rate of reimbursement by requiring a Medicaid-only case mix in calculating the rates.
• Section 37 removes the March 31, 2009 expiration of the 6 % nursing home assessment as of that date.
• Section 38 eliminates supplemental payments to emergency transportation providers.
• Sections 39 through 55 advance a multifaceted Medicaid Integrity Plan by:
• Establishing a New York State False Claims Act to allow private persons to bring civil actions on behalf of New York State to recover funds wrongfully obtained through fraud;
• Establishing a “Martin Act” for Health Care to strengthen the Attorney General’s authority to investigate and prosecute health care fraud;
• Implementing various other reforms to enhance the State’s authority to combat fraud by allowing the Office of the Medicaid Inspector General’s (OMIG) to access records of the Tax Department and the Workers’ Compensation Board, strengthening criminal penalties for certain fraudulent health care practices, clarifying the requirements for the provider compliance program, clarifying the manner by which illegally sold prescriptions and prescription medications will be valued, establishing criminal penalties for possession of diverted prescription drugs, providing “whistleblower” protections for employees who report health care fraud, and designating the Supreme Court in Albany as the only venue where providers may challenge Medicaid determinations made by the Commissioner of Health.
• Sections 56 through 63-a make various technical amendments, including changes to the Wage Equalization Factor (WEF) and IDA financing for Continuing Care Retirement Communities, amendments required to comply with Federal Deficit Reduction Act mandates for the nursing home transition and diversion waiver and third party recoveries, and a technical change to continue the application of Medicaid local cap remittance payments to offset Medicaid General Fund spending consistent with current practice.
• Sections 64 through 68 extend various expiring laws including continuing public hospital Disproportionate Share and Upper Payment Limit (UPL) payments and nursing home UPL payments to public facilities, extending certain provisions relating to the Child Health Insurance Program and contracts, and continuation of other vital programs (i.e., Limited Licensed Home Care Service agencies).
• Sections 69 through 89 continue prior year cost containment for hospitals, nursing homes, and home care and extend other necessary measures.
• Sections 90 through 93 advance the time frames of notice; emergency rule promulgation; severability; and effective dates.

Existing laws related to the proposed provisions are contained in the following State statutes. Specifically:

• Elder Law: Section 250 relates to EPIC AWP reduction.
• Penal Law: Article 178 relates to criminal penalties for sale and possession of diverted prescription drugs.
• Social Services Law: Section 145-b relates to monetary penalties for those engaging in fraudulent activities; Section 367-(a) pertains to increasing AWP reductions for the Medicaid prescription program.
• Civil Practice Laws and Rules: Section 506 relates to the venue of Article 78 proceedings brought by Medicaid providers.
• Public Health Law: Sections 272 and 274 relates to New York State’s preferred drug, clinical drug review and prior authorization programs, and Sections 2510 and 2511 relate to Child Health Insurance Program initiatives, Section 2807-c relates to hospital reimbursement changes, and Section 2808 relates to nursing home reimbursement changes (i.e., Wage Equalization Factor).

Prior year Medicaid cost containment actions were enacted in various budget bills as early as 1996 and extended subsequently several times since then, most recently in Chapter 57 of the Laws of 2006.

Currently, New York State taxpayers support a $46.5 billion Medicaid program that provides an array of services to approximately 4 million recipients. The 2007-08 Executive Budget advances a series of cost savings measures to make New York’s Medicaid program more affordable while maintaining the State’s position as a national leader in providing high quality health care services. This bill initiates a fundamental restructuring of New York's health care system by:

• Building a bridge to a rational reimbursement system for hospitals, nursing homes, and other health care services;
• Shifting spending from expensive institutional care toward community and home-based alternatives;
• Strengthening care coordination and management for high cost individuals to reduce costs and improve treatment outcomes;
• Appropriately paying for pharmaceuticals by reducing the cost of prescription drugs and setting the stage for more equitable payment measurements;
• Strengthening the State’s anti-fraud capabilities by advancing a False Claims Act, a Martin Act for Health Care and other reforms so that taxpayer resources are appropriately being used to further improve quality of health care for all New Yorkers; and
• Implementing various other cost containment measures to encourage program efficiencies and make health care more affordable.

Absent these measures, total Medicaid program spending — Federal, State and local government combined — would reach $48.7 billion in 2007-08.

This bill also advances reforms to expand access to health insurance coverage for the uninsured by:

• Providing access to health insurance for all children by expanding eligibility in the Child Health Plus Program;
• Simplifying the enrollment and recertification process for Medicaid and Family Health Plus programs to reduce gaps in coverage; and
• Creating a new program to promote employer sponsored health insurance programs by providing cost effective premium subsidies for individuals eligible for public health insurance coverage. This new program would also satisfy the requirements for the Federal-State Health Reform Partnership (F-SHRP) waiver.

Part D – Renew and lower reimbursable tax assessments from six percent to five and one-half percent on OMRDD licensed Intermediate Care Facilities

This bill amends the Mental Hygiene Law in relation to provider assessments.

Sections 1 through 3 of this bill reduce the assessment imposed upon providers licensed by the Office of Mental Retardation and Developmental Disabilities, which includes not-for-profit providers and State-operated providers, from six percent to five and one-half percent. This change ensures that the law is consistent with recently enacted Federal legislation (Public Law 109-432), which limits such assessments to five and one-half percent effective January 1, 2008.

BUDGET IMPLICATIONS:

Part A – Modify and reauthorize the Health Care Reform Act (HCRA), which expires on June 30, 2007 and modify provisions to enact proposals to preserve its fiscal stability and authorize an additional insurance company conversion

Enactment of this bill is necessary to implement the 2007-08 Executive Budget and the State’s multi-year Financial Plan, which reflects continuation of HCRA funding for a number of important health programs and a series of revenue and cost containment actions. In 2007-08, a total of $376 million in HCRA savings will be generated, including $219 million associated with HCRA specific revenue and cost containment actions.

Part B – Improve public health services by implementing cost savings measures, authorizing new fees and extending priority programs

Enactment of this bill is necessary to implement the 2007-08 Executive Budget, which recommends net General Fund savings of $63.4 million in 2007-08 associated with these initiatives.

• Changing EPIC pharmacy reimbursement will generate 2007-08 savings of $19.4 million;
• Mandating EPIC enrollees’ participation in Medicare Part D will result in 2007-08 savings of $43 million;
• Increasing the dispensing fee on generic drugs will cost $1.7 million in 2007-08;
• Requiring insurers to reimburse for EI services will generate savings of $5.1 million commencing in 2008-09;
• The Early Intervention approval process will drive an administrative cost of $400,000 in 2007-08, which will be offset by the new provider fee. This initiative will have no impact on the General Fund;
• Increasing the physicians' biennial registration fee will generate additional revenues of $11 million in 2007-08 which will offset program expenses. This initiative will have no impact on the General Fund;
• The student BMI reporting initiative will cost $300,000 annually; and
• Repealing the health information technology program will save a total of $3 million annually.

Part C – Authorize Medicaid cost containment and reforms to provide access to health insurance coverage

Enactment of this bill is necessary to ensure State Financial Plan savings totaling $919 million in 2007-08 and $934 million in 2008-09 as follows:

• $456 million of savings in 2007-08 ($471 million in 2008-09) to implement various cost containment measures including: elimination of nursing home and hospital trend factors; instituting pharmacy savings actions; and various other measures;
• $463 million of savings in 2007-08 (recurring in 2008-09) associated with extending prior year cost containment provisions.

In addition, this bill requires targeted State investments estimated to cost $39 million in 2007-08 ($138 million in 2008-09) for the streamlining of the enrollment process for Medicaid and Family Health Plus programs and the expansion of the Child Health Plus Program (supported by Health Care Reform Act revenues) to improve access to health insurance coverage for the uninsured, and the demonstration projects for high-cost users.

Part D – Renew and lower reimbursable tax assessments from six percent to five and one-half percent on OMRDD licensed Intermediate Care Facilities

As a result of Federal legislation, enactment of this bill will result in a Financial Plan cost of approximately $1.75 million in SFY 2007-08, annualizing to $7 million thereafter. There is no impact on not-for-profit providers, since the cost of the assessment is fully reimbursed as an allowable Medicaid expense.

EFFECTIVE DATE:

Part A – Modify and reauthorize the Health Care Reform Act (HCRA), which expires on June 30, 2007 and modify provisions to enact proposals to preserve its fiscal stability and authorize an additional insurance company conversion

This bill takes effect April 1, 2007, except that selected provisions take effect immediately or on specified dates.

Part B – Improve public health services by implementing cost savings measures, authorizing new fees and extending priority programs

Sections 4, 5, 6, 7, 9, 10, 11, 12, 13, 14 and 15 of this bill take effect on April 1, 2007. Sections 1, 2, 2-a, 3 and 8 take effect on July 1, 2007.

Part C – Authorize Medicaid cost containment and reforms to provide access to health insurance coverage

This bill takes effect April 1, 2007 with the following exceptions:

• Streamlining eligibility for Medicaid and Family Health Plus programs (Sections 1 through 1-e) will be effective January 1, 2008.
• Medically Complicated and High Cost Users Demonstration Program (Sections 2 through 2-b) shall be deemed repealed on March 31, 2010.
• AWP reduction (Section 23) will be effective July 1, 2007.
• Continuation of the hospital assessment (Section 30) will be deemed in full force and effect on and after April 1, 2005.
• Permanently continuing the Nursing Home Assessment at 6% (Section 37) will take effect on April 1, 2009.
• The WEF update (Section 56) will be deemed in full force and effect on and after April 1, 2006.

Part D – Renew and lower reimbursable tax assessments from six percent to five and one-half percent on OMRDD licensed Intermediate Care Facilities

This bill takes effect immediately.